MAHESH ANANTRAI PATTANI Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) IN this Reference under Section 66(1), the principal question that arises for our determination relates to the ambit and scope of Section 7(1) and Explanation 2 to the same prior to the amendment of the section by the Finance Act, 1955 and the question arises in the context of a payment of Rupees five lacs made as a gift by the employer, the Maharaja of Bhavnagar, to the assessee who had been his Chief Dewan "in consideration of ... ..having rendered loyal and meritorious services." The section, relevant parts of which we shall presently set out, as is well -established, was couched and also after its amendment in 1955 remains couched in the broadest possible terms. So stringent and embracing has been the rule that even a purely voluntary payment of the nature of a gift or prize or reward when given by a quondam employer to his employee has been regarded as falling within the very wide reach of the section if the object or consideration which moved the employer in making the payment was of remunerating or recompensating past services. Within its compass, have been all employees, high and low, regardless of nomenclature or designation.

(2.) IN 1937 the Maharaja of Bhavnagar appointed the assesses Mr. Anantrai Prabhashankar Pattani as the Chief Dewan of his State. Mr. Pattani continued to hold that office till January 1948 when responsible government was introduced in the State by the Maharaja. At that time Mr. Pattani was drawing a salary of Rs. 2000/ - per month and enjoyed certain additional perquisites. On 22 -1 -1948 the Maharaja passed an order By that order the Maharaja fixed a monthly pension for the retiring Chief Dewan at Rs. 2000/ -. An extract of that order is as follows :

(3.) THE Appellate Assistant Commissioner confirmed the order passed by the Income -tax Officer. The matter was carried by the assessee in appeal to the Tribunal and tire Tribunal dismissed the appeal. The Tribunal in its order laid stress on the order of 27 -12 -1950. It was not impressed and found it difficult to rely on the contents of the letter dated 10 -3 -1953, written by the Maharaja to the assessee. The assessee has now come before us on this Reference.